If you rent a property in the free sector, then you probably agreed in your lease that you can raise the rent once a year. Most leases neatly include an indexation clause. This regulates that the rent may be increased in accordance with a certain index. In most cases this is the statutory (by the Minister) inflation index figure + 1%. Note: this article is NOT about increasing rents in the social sector, where entirely different rules apply. This article is only about raising rents in the free sector.
Per when are you allowed to raise rent in the free sector?
The lease usually stipulates that this is done annually at a set time. For example, on July 1. However, many landlords are late in raising rent in a timely manner or have simply forgotten. In that case, you can always still raise the rent immediately. How that works we explain below.
Raising rent if you’re late
Suppose you rent a property in the free sector. In the lease agreement, you have included an indexation clause regulating that you may capitalize the rent annually on March 1. It is now April 15 and you find out that you forgot to raise the rent. No problem. You can simply send the tenants a letter that the rent has been increased per the next rent payment according to the legally permitted rent increase.
Indeed, you can even require the tenant to pay the increased rent retroactively. You can read how that works below.
Retroactively raise rent in the free sector
In the free sector, the tenant’s annual rent increase is by right. Even if the landlord has not requested it. Thus, as a landlord, you can still claim payment of rent increases that have not been paid from the indexation date through today. How that works we explain below simply through an example.
Explanation: raise rent in free sector retroactively
Suppose you have a lease with your tenant that started May 1, 2021. In it you have arranged through an indexation clause that the rent may be increased every year on May 1. You, as the landlord, have not rented before and it is already Jan. 25, 2023. So you forgot to raise the rent in 2022. ‘Sin’ you think.
Important to note briefly in this example:
>>Legally, rents were allowed to rise 3.3% in 2022 and 4.1% in 2023.
>>The initial rent was €1000 per month.
>>So it is now (in this example) Jan. 25, 2023.
So you can then raise the rent:
You send the tenants a letter that the rent has been increased by 3.3% as of the next rent payment date by operation of law and retroactively since May 1, 2022. The new rent will then be €1000 + 3.3% = €1033 per month. Furthermore, over the period May 2022 to January 2023, rent was underpaid each month by €33. Therefore, you also request the tenants to transfer the deficit of €33 for these past 9 months to you as well. That’s 9 * €33 = €297.
But then you’re not there yet. In accordance with the lease, the rent may also be increased again by the maximum percentage allowed by law as of May 1, 2023. That’s a 4.1% rent increase in 2023. That means that in the same letter to the tenant you can immediately give a2nd notice, namely to increase the rent of €1033 by 4.1% as of next May 1, 2023 so that the new rent as of May 1, 2023 will be: €1075.35.
When can you stop raising rent in the free sector?
You cannot retroactively increase rent more than 5 years back.
It is also no longer possible if, for example, you made representations as a landlord that allowed the tenant to trust that the rent had not been increased. For example, by neatly billing the tenant for rent each month or having informed him in writing that you would not raise the rent.
Should the rent in the free sector be increased on the date from the contract?
No you don’t. It may also be after the indexation date in the contract. It’s just not allowed before. If the indexing date is May 1, you may also increase the high on October 1 of that year. You may only raise the rent a maximum of 1 time per year.
Is it smart to raise rent retroactively?
It depends on each situation. In many cases, however, we do not think this is neat. We ourselves believe in good landlordism which includes neat dealings with tenant. Raising a rent retroactively because as a landlord you forgot to index the rent for years is not neat and can get many tenants in trouble. In most cases, we would advise against it. Just because it is mostly not ethical.
Do you have a sample letter for raising rent in the free sector?
Yes indeed? Here you will find a free sample letter for raising the rent in the free sector. Both in Dutch and English.
Sample letter to raise rent free sector – Dutch
Sample letter to raise rent free sector – English
Reading Tip:
By how much can you increase the rent in the free sector?
Goodluck!